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Start-Up Law: Formation

An Introduction to Formation

To Incorporate, or Not to Incorporate

If only the question were that simple. However, whether or not to form a new business as a corporation is only one of the many questions raised during formation.  Other issues include which state to incorporate in, how to fill out the formation documents, how to file the formation documents, and how to set up the capital structure of the entity.

For a brief overview of some of these issues including choosing the type of entity, state of formation, and capital structure, watch the Bloomberg Law video below.  It is about ten minutes long and explains some of the basic issues and answers in this area. Additionally, the Shared Secondary Sources tab, and Secondary Sources sub-page of this section contains several treatises, articles, books, blogs, and state websites which more fully explain these issues with an emphasis on the law of Delaware, California, Nevada, and Texas. While those states are emphasised, general resources and a State Survey of statutes provide guidance for other states.

After learning generally about formation through secondary sources, new practitioners may want to get started with Sample Documents provided by many treatises, state websites, and Practical Law Company. Further, new practitioners should check their understanding of the area, and the accuracy and completeness of their forms, with the relevant state's statutes to make sure that all the required information is in their documents. I have provided links the official state statutes of California, Delaware, Nevada, and Texas under Primary Sohurces. That sub-tab also has the link to a Westlaw 50 State Survey providing the statutes regarding corporation formation in other states.

One of the first issues on a company's mind may be the name. It is easy to check and see if there is already a similar corporate name in existence; most secretary of state's websites include a way to search existing business entities. Here are some links to some representative searches:

   - California (Secretary of State business search)

   - Delaware (Division of Corporations entity search)

   - Texas (Secretary of State's SOSDirect online search)

   - Nevada (Secretary of State business search)